From UPSC perspective, following things are important:
Prelims level: Structure, functions and objectives of NITI Aayog. Particulars of the three Year Action Agenda, the seven-year policy strategy and the 15-year long-term vision
Mains level: Very important op-ed on planning in future and its challenges. Important for Mains Paper 3: Economy | Indian Economy Issues relating to planning
- The draft “Three Year Action Agenda” of the NITI Aayog has been circulated recently to its governing council
- This draft will be finalised after considering suggestions from the State Governments
- After(Union Government) allowing for the 12th five-year plan to phase itself out, the transition is now complete
- Five-year plans are reminiscent of centrally planned economies; most such countries, like the Soviet Union, China and Romania, had similar planning horizons
Other documents in the pipeline
- The seven-year policy strategy
- The 15-year long-term vision
Objective of Three Year Action Agenda
- It seeks to embark on “a path to achieve all-round development of India and its people” through concerted action.
What are the advantages of a three-year timeline?
- Electoral cycles do not synchronise with (earlier)five-year plans; quite often, this entailed outcome accountability to rest with a successor government.
- But a “Three Year Action Agenda” makes the government in office more directly accountable for the implementation of its plans
- Augmenting the “Three Year Action Agenda” with a seven-year implementable policy strategy and a 15-year vision enables us to look into the future, particularly at evolving technology, demography and ecology, and accordingly align our policies
- The 15-year vision is also somewhat coterminous with the Sustainable Development Goals (SDGs) of the United Nations (UN). The new format thus combines domestic aspiration with global aims.
are the forecasts of macro variables realistic?
- the agenda projects three scenarios for nominal GVA (Gross Value Added), namely, low growth, baseline and high growth.
- The nominal GVA is expected to increase by 11.6 per cent, 12.3 per cent and 13 per cent in the next three years under the baseline scenario
- These growth forecasts are aligned with recent trends and expectations of both national and international agencies
- Relying on the proposals forwarded by the Fiscal Responsibility and Budget Management (FRBM) Review Committee, the action agenda estimates a fall in the share of non-development revenue expenditure, both as a proportion of total budget expenditure and GDP ,As ill-advised distinction between revenue and capital expenditures has spurred a misallocation of resources
- The Gross Tax Revenue (GTR) forecasts under the “low growth” scenario closely resemble the rolling targets outlined in the Medium Term Fiscal Policy Statement of Budget 2017-18.
- The direct tax to GDP ratio is expected to increase
how likely are we to achieve these targets?
- Given the healthy state of the Indian economy, downside risks to achieving growth targets largely emanate from exogenous factors: Unfavourable monsoons, global protectionist trends and spikes in oil prices could impinge our twin deficits
- Fortunately, a more robust approach on disinvestment and seeking strategic alliances is a positive factor. The public listing of PSUs will enable improved price discovery
how can we ensure effective implementation of the action agenda?
- The proposed plan needs broader support
- Important: Part of the problem is the current design of parliamentary processes and the milieu in which standing committees of Parliament examine various ministries
- More specifically, the Standing Committee on Finance examines matters related to three separate ministries, namely, finance, corporate affairs and statistics and programme implementation, along with the erstwhile Planning Commission
- There was scant attention given to or time available for analysing the broader issues of the five-year plans. We must prevent the NITI Aayog from meeting the same fate
- It would be advantageous to constitute a separate parliamentary committee on planning, which could meaningfully engage with the NITI Aayog’s policy prescriptions
- Delinking planning from finance has distinct advantages as functions of the treasury are neither symmetric, nor co-terminus with broader development issues
- Such separations would also be in line with best global practices
- Also, in the notification constituting the NITI Aayog, there is a provision to form “Regional Councils to address specific issues impacting more than one state or a region”. This is the right time to implement this enabling mandate